NEW BOOK: Understanding the National Debt

UNDERSTANDING THE NATIONAL DEBT

"This book constitutes an attempt to get beyond the 'tax increase–program cuts' alternatives. It is an effort to confront the debt issue from outside of the proverbial box." - Carl Lane

INTRODUCTION

In recent years, and especially now during the 2016 presidential campaign, the news media and many politicians frequently remind us that the United States has a debt problem—namely, that the nation owes more than $19 trillion while its gross domestic product (GDP) is roughly only $18 trillion. Put another way, our national debt, we are told, is more than 100 percent of GDP, a debt-to-GDP ratio that is exceedingly unhealthy and unparalleled in our history since the end of World War II. Conservative Republicans perceive this debt as an immediate threat to our economy, a danger that is in our faces right now. Their solution is to espouse austerity, to cut federal expenditures to arrive at a balanced budget, and avoid becoming like Greece. Liberal Democrats, on the other hand, see the debt as a problem on a distant horizon, one to be addressed by increasing taxes, especially on the wealthiest elements in American society, to achieve a balanced budget.

These differences in perception and proposed solutions aim at the same target: a balanced federal budget. After all, eliminating annual budgetary deficits is the only way that the national debt can be pared down. Yet the Republican and Democratic alternatives have dominated debate about the debt issue for nearly a decade, and have stifled the emergence of new ideas which might transcend the austerity–versus–tax increase boundaries of the current discussion of the debt issue. The fate of the Bowles-Simpson (frequently called “Simpson-Bowles”) Commission’s report on “fiscal responsibility and reform” illustrates this point. It recommended both tax hikes and program cuts. Apparently for this reason, both conservative Republicans and liberal Democrats turned their backs on it. Although the report should have served as a springboard for negotiation and compromise, it was dead in the water upon publication. This book constitutes an attempt to get beyond the “tax increase–program cuts” alternatives. It is an effort to confront the debt issue from outside of the proverbial box.